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Speaking of not doing stuff on time, I've got some way older relatives that became interested in investing/retirement savings once I mentioned doing it... What can somebody in their 50's do? I can anticipate that the answer will be "not a whole lot", but a little is better than nothing. They're also in the US and not Canada like me so maybe this'll be easier to answer.
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Apr 22, 2011 22:15
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If they have a 401(k) option at work they are eligible to contribute $16,500 a year and up to $5,000 in 'catch up' contributions. 401K contributions are from pre-tax income (they reduce your annual tax burden and taxes are payed when you withdraw.) Also they are eligible, if they make less than the cap (MAGI < $107k-169k depending on status) they can contribute up to $6,000 a year to a ROTH IRA in post-tax funds which will remain tax free as long as they are in the account. The conventional wisdom is 401(k) up to the match, then a ROTH, then the rest of the 401(k). I'm a bigger fan of max 401(k) and then ROTH, but I like my 401(k) options and don't have a lot of deductions/credits now (no kids/mortgage). Saving up to $27,500 a year is a great place to start. Good luck. There is never a too early or too late time to start.
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Apr 22, 2011 22:44
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Goddamn posted:Speaking of not doing stuff on time, I've got some way older relatives that became interested in investing/retirement savings once I mentioned doing it... What can somebody in their 50's do? I can anticipate that the answer will be "not a whole lot", but a little is better than nothing. They're also in the US and not Canada like me so maybe this'll be easier to answer.
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Apr 23, 2011 15:41
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KennyG posted:If they have a 401(k) option at work they are eligible to contribute $16,500 a year and up to $5,000 in 'catch up' contributions. 401K contributions are from pre-tax income (they reduce your annual tax burden and taxes are payed when you withdraw.) Also they are eligible, if they make less than the cap (MAGI < $107k-169k depending on status) they can contribute up to $6,000 a year to a ROTH IRA in post-tax funds which will remain tax free as long as they are in the account. If they still haven't paid off any major debts, those probably take precedence, I would assume.
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Apr 23, 2011 19:25
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Zero The Hero posted:If they still haven't paid off any major debts, those probably take precedence, I would assume. YES! Money is by definition fungible. Paying 15%, 20%, 25% or more on a credit card while trying to invest and get <10% is not saving. It's throwing money away. Debts, emergency fund, retirement. The only exception is if you get a 401k match at work. A 401k match needs to be viewed like an instant, guaranteed 100% return. If your credit cards are less than 100%, the 401k up to the match takes precedent.
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Apr 24, 2011 01:28
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I was home for Easter this weekend and came across my dad's quarterly 401k statement. His retirement planning needs drastic changes but I'm not sure of the best way to go about this. He will be 59 in November. He's been at the same job since he was 18, and his 401k represents 100% of his retirement assets. He divorced in 2002 and half of his then-balance went to my mom, and then the crash in fall of 2008 didn't help. His current balance is just around $725,000. The 401k is managed by American Funds. To say that his current allocation is aggressive doesn't cut it. His allocation borders on insanity. I asked him about it and he said that he "needs to make his money back" after losing 1/3 of his assets in 2008. I explained to him that at his age, he needs to accept his retirement assets for what they are and stop gambling with his money. His current allocation is 90% "growth" stocks, 5% bonds, and 5% cash-equivalent. I explained to him that I'd like to see him in 60% bonds right now, if not more. He's entirely in actively-managed funds that are taking expense ratios of between 0.93 to 1.47 depending on the fund. His cash-equivalent fund charges him a 0.52 expense ratio. This is insanity. I was originally going to just reallocate his funds for him until I noticed that all of the funds offered in his 401k plan have up-front sales loads of 5.75% for equity funds and 3.75% for bond funds. If I get him to accept a 60% bond allocation, I'd need to move about $375,000 from equity to bonds. At 3.75% sales loads, that's just over $13,000. Do I have him just take the $13,000 hit in order to get his portfolio into a safer position? On another note, it's likely that his company is going to go under within the next 3 years, so my long-term plan is to roll his account over into a traditional IRA at Vanguard with some low-cost index funds and bonds. But I need to get him to survive that long.
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Apr 25, 2011 01:03
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10-8 posted:I was home for Easter this weekend and came across my dad's quarterly 401k statement. I hate it when you reach for the sports section and accidentally start reading your parent's personal financial documents. 10-8 posted:I was originally going to just reallocate his funds for him... Do you mean that you were going to vigorously try to convince him to get his portfolio away from the brink? Because that sounds like a really good thing to do. Because if you just go in there and change his allocation behind his back that's probably illegal. In fact, that's probably illegal in several ways (financial laws as well as identity theft laws, though I'm not a lawyer, however I do have common sense).
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Apr 25, 2011 03:25
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gp2k posted:I hate it when you reach for the sports section and accidentally start reading your parent's personal financial documents.
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Apr 25, 2011 13:08
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Your father is not actually that old, and it doesn't sound like he's in a financial position where he'll be able to stop working in the next 10 years, so a more aggressive mix doesn't sound like the worst idea in the world to me especially given the high costs of shifting the allocation. I agree with you that his current mix is definitely too aggressive for his place in life and he's in some lovely funds, but 60% sounds a little high considering his retirement horizon. Were I you I might try to talk him into shifting some of his assets into bonds (you'll probably be able to talk him into 35-45%) and then try to ride it out until the company folds and he can roll it over and look for different work. But regardless, you're likely not going to be able to just "do it for him", so anything you try you'll have to convince him into it first.
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Apr 26, 2011 17:44
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Sophia posted:Your father is not actually that old, and it doesn't sound like he's in a financial position where he'll be able to stop working in the next 10 years. Really? How long do you expect him to live? Do you have any idea what his expenses are? Wouldn't what he has now rolled into tax-exempt muni bonds give him a comfortable 25-30k a year? And when you add in Social Security it seems to me that he should be fairly comfortable without even touching his principle. But even if he were to pull 25 or 30 k out of his principle every year that would be sustainable for 25 years or so. Sounds like a pretty comfy retirement to me.
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Apr 26, 2011 18:21
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That's true, his cost of living might be low, and obviously there might be a lot of factors that affect this (does he have other savings, does he own a house, what kind of shape is it in, does he still have divorce costs, what is his health like, what kind of insurance will he have, is he good with money, what does he want to do in retirement) and 10-8 would know more about that than me for sure. But $25-30K per year for 25 years doesn't sound sustainable even given the likelihood of even minor health problems in that period and his likely lack of good retirement health care (since his company has never had a pension plan outside of a 401k) and the rising cost of long-term care as he ages (especially given that the Baby Boomers are going to jack up costs like crazy in the next few years). That's not even counting the fact that he seems to not be all that great with financial concepts. I would not recommend that anyone retire at 60 with only $725K in a 401k and no other pension options but Social Security, but if 10-8 thinks that his retirement horizon is actually only a few years away because of other reasons that I don't know about, then I agree that he should get him very very far out of the allocation he's currently in.
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Apr 26, 2011 18:38
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Sophia posted:That's true, his cost of living might be low, and obviously there might be a lot of factors that affect this (does he have other savings, does he own a house, what kind of shape is it in, does he still have divorce costs, what is his health like, what kind of insurance will he have, is he good with money, what does he want to do in retirement) and 10-8 would know more about that than me for sure. I looked more into his 401k plan and the plan allows for in-service distributions when he turns 59 1/2, so I'm going to tell him to leave his allocation as-is for the next year, and then in May 2012, when he turns 59 1/2, I'm going to recommend that he rollover the entire 401k balance into a Vanguard IRA where he can reallocate on the cheap and lower his expense costs, too. I am going to take the thread's advice that perhaps 60% bonds is too conservative, so hopefully he will be happier with 40-45% bonds. 10-8 fucked around with this message at 03:56 on Apr 27, 2011 |
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Apr 27, 2011 03:53
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I have some simple questions. I just opened a Roth IRA (huzzah!) with ING's Sharebuilder, but being a lowly graduate student I can only fund it with about $400 at present, though I am hoping to contribute another $600 this year (it's more psychological than anything, really - I want the mentality of "I am investing for retirement"). At present I have so little that it seems as if trading fees would eat it up if I bought a bunch of different index funds. Is there a single fund I can buy that would do the trick until I have several thousand and can begin to diversify a bit? Along that same line, is it possible to buy a Vanguard ETF like VOO without either a Vanguard account or the $3,000 minimum that they seem to require when investing in it through them? Thanks in advance!
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Apr 27, 2011 22:18
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That is a really rough situation 10-8.  Good luck with everything. And definitely don't take my word as gospel, especially if you think there's a good chance he won't be able to find work in a couple of years. Better for him to have a comfortable amount of money for now than risk losing too much too young.For what it's worth I think your plan of taking the money out at 59 1/2 for reinvestment elsewhere is a good one - you may want to check to see if there are tax implications for removing too much at once though, or if there is a difference between a distribution and a rollforward. I honestly have no idea if there would be, but better safe than sorry.
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Apr 27, 2011 22:23
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10-8 posted:That's why I'm so concerned about protecting the funds in the plan; maybe I'm overly conservative, but it's literally all he has. He should really consult a financial adviser or CFP. Which would be my advice to anyone approaching retirement. (I can't make my own parents listen though, so good luck!) 
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Apr 27, 2011 23:58
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striking-wolf posted:I have some simple questions. I just opened a Roth IRA (huzzah!) with ING's Sharebuilder, but being a lowly graduate student I can only fund it with about $400 at present, though I am hoping to contribute another $600 this year (it's more psychological than anything, really - I want the mentality of "I am investing for retirement"). At present I have so little that it seems as if trading fees would eat it up if I bought a bunch of different index funds. Is there a single fund I can buy that would do the trick until I have several thousand and can begin to diversify a bit? Along that same line, is it possible to buy a Vanguard ETF like VOO without either a Vanguard account or the $3,000 minimum that they seem to require when investing in it through them? You can use the: NFT(was that right?) They have 20+ funds from: American Century, Dreyfus, ING Funds, PIMCO that you can stick your money into for free. The minimum should be $500 for each though, and I don't see a "one stop shop" or "target fund" from those that I can recall. Even with Target Funds or One Stop Funds, you are looking at minimums of $1k to start, and $500 increments.
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Apr 28, 2011 06:52
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striking-wolf posted:I have some simple questions. I just opened a Roth IRA (huzzah!) with ING's Sharebuilder, but being a lowly graduate student I can only fund it with about $400 at present, though I am hoping to contribute another $600 this year (it's more psychological than anything, really - I want the mentality of "I am investing for retirement"). At present I have so little that it seems as if trading fees would eat it up if I bought a bunch of different index funds. Is there a single fund I can buy that would do the trick until I have several thousand and can begin to diversify a bit? Along that same line, is it possible to buy a Vanguard ETF like VOO without either a Vanguard account or the $3,000 minimum that they seem to require when investing in it through them? At that little it really doesn't matter. You could stick it in a money market account and won't notice much difference. Just avoid fees until you can start saving more. Still, good on you for starting early.
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Apr 28, 2011 12:40
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Anyone have personal experience or suggestions about value averaging vs. dollar cost averaging for long-term investments? (My retirement accounts are entirely DCA, as I think that needs to be automated for me, but I could give quarterly value averaging a shot with other accounts if it seems worth it.)
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Apr 28, 2011 19:03
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onefish posted:Anyone have personal experience or suggestions about value averaging vs. dollar cost averaging for long-term investments? These usually are only considered "strategies" when you have large amounts of money to move in at one lump and want to reduce risk at the cost of some expected gain. When you are already making monthly deposits it makes no sense to artificially sit out of the market just to do some averaging strategy (assuming you expect positive returns from the market in the long run, and if not why are you investing at all?).
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Apr 28, 2011 21:13
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onefish posted:Anyone have personal experience or suggestions about value averaging vs. dollar cost averaging for long-term investments? Value Cost Averaging can work in retirement accounts. It takes a lot more discipline and effort to make the investment. You'd likely want to reset your value calculation at given periods. Obviously, if you are investing long term, you are likely investing long term and hopefully your investment will go up (which would reduce your absolute contribution) Something annually though may not be a bad idea. Most investment systems do not have automated value cost averaging features, so doing this can be difficult and if you forget to do it at the right time, you can actually work against yourself. If you've ever found yourself wishing you had more money to invest after one of your funds takes a (you hope) temporary hit, this is a good way to do it. It becomes even more complicated if your contribution is balanced between multiple funds. On a side note, anyone know why some modern companies don't allow for automating this? It should be rather simple to do.
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Apr 30, 2011 20:45
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How should I invest in my TSP? I was previously in the L2040 fund, but have instead started taking a more active approach. I am 26. I want to retire at age 55. Mandatory retirement for my job is 57, anyways.
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May 1, 2011 03:38
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fivetwo posted:How should I invest in my TSP? What's wrong with the L2040, and what do you mean by a more active approach? If the TSP was my only investment vehicle, I would have my money in the L2040. As it is, I have to balance between my and my wife's outside investments to come out with something a little more tax efficient.
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May 1, 2011 04:58
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fivetwo posted:How should I invest in my TSP? Income? Contribution percentage? Retirement requirements? Risk tolerance? What grade do you expect to be when you retire? Do you expect to spend ~30 years in the same, exact job? Are you a law enforcement officer? How are you exempt from the 20 year in service mandatory retirement that goes with many of the age 57 requirement jobs? You can look at the holdings of the life cycle funds and tweak yourself.
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May 1, 2011 05:30
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What should my long term investment and retirement planning look like if I'm going to be ineligible to contribute to Roth IRAs due to (exceeding) income restrictions for an extended period of time? From what I've gathered all I can do is dump money into my company's 401k and get bilked out of money either through non-tax sheltered accounts or hoping some guy manages my money better than I would. Meanwhile, my Roth IRAs will just sit and do their thing until I start not making much money again or they raise the income restrictions or whatever. This wouldn't be a big deal and all if I was somewhat near retirement age, but I'm just 27 and only have about $80k in retirement accounts including my 401k and my wife has less than nothing so I feel very vulnerable (couldn't scrounge the money to open up an IRA for her after emergency upon emergency cleaned me out).
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May 1, 2011 18:06
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necrobobsledder posted:What should my long term investment and retirement planning look like if I'm going to be ineligible to contribute to Roth IRAs due to (exceeding) income restrictions for an extended period of time? From what I've gathered all I can do is dump money into my company's 401k and get bilked out of money either through non-tax sheltered accounts or hoping some guy manages my money better than I would. Meanwhile, my Roth IRAs will just sit and do their thing until I start not making much money again or they raise the income restrictions or whatever. This wouldn't be a big deal and all if I was somewhat near retirement age, but I'm just 27 and only have about $80k in retirement accounts including my 401k and my wife has less than nothing so I feel very vulnerable (couldn't scrounge the money to open up an IRA for her after emergency upon emergency cleaned me out). 2) Invest in taxable accounts after that - choose funds to place in taxable accounts using information like http://www.bogleheads.org/wiki/Principles_of_Tax-Efficient_Fund_Placement Also, you are like $80k ahead of most other people your age, so don't sweat it You would have to have a really, really bad 401(k) to skip step 1), and keep in mind, you can always roll that over into a rollover IRA when you leave your current job, so even if it is terrible now, you can move it into a better account down the line.
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May 1, 2011 19:06
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Another thing you can do is fund a post-tax non-deductible IRA, and then immediately convert and roll it into your Roth IRA. In this manner, you still get the contribution and can skip around the income limits.
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May 1, 2011 20:32
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Just re-balanced my Tax Free Savings Account. Previously I was over-weight in precious metals equity and under-presented in debt. Now: 25% RBC Global Precious Metals Mutual Fund (RBF468) 15% iShares S&P TSX Capped Materials Index Fund (XMA-T) 10% Vanguard Consumers Staples ETF (VDC-N) 25% iShares DEX Short Term Bond Index Fund (XSB-T) 25% The Claymore Advantaged High Yield Bond ETF (CHB-T) Both the mutual fund and XMA were fairly kind to me last year. But I will plan to re-balance to include a broad Canadian TSX index fund (probably XIU) if they don't start performing better this year. My entire RRSP is in a wrap that's up 10% last year. MER is 1.6%. I plan to move it into an entirely ETF portfolio sometime soon. Phlegmbot fucked around with this message at 22:48 on May 1, 2011 |
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May 1, 2011 22:40
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That doesn't mean much if you don't tell us your total allocations, not just tax free. But 40% precious metals seems crazy.
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May 1, 2011 22:59
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gvibes posted:That doesn't mean much if you don't tell us your total allocations, not just tax free. That is the total allocation, and it's all tax-free. I agree I'm still over-weight in precious metals. It's much better than before, though. I'm OK with the risk. No plans for this money any time soon. I watch the thing like a hawk and I will take action to protect my profit from last year.
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May 1, 2011 23:55
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Phlegmbot posted:I agree I'm still over-weight in precious metals. So you agree you are doing it wrong and don't care? quote:I'm OK with the risk... You track your portfolio extremely closely and would take hasty action to protect profits, yet you are okay with large amounts of risk? Does not compute.
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May 2, 2011 00:05
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KennyG posted:Income? Contribution percentage? Retirement requirements? Risk tolerance? What grade do you expect to be when you retire? Do you expect to spend ~30 years in the same, exact job? Are you a law enforcement officer? How are you exempt from the 20 year in service mandatory retirement that goes with many of the age 57 requirement jobs? Income is about 75k. I contribute 11%, so with match that's 16%. Risk tolerance? I'm 26, so a lot? I will retire at least as a 13. by Active Management, I have been trying some of the strategies on TSPTalk, such as the Seasonal strategy.
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May 2, 2011 00:38
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Chin Strap posted:So you agree you are doing it wrong and don't care? Yeah, sorry I'm not expressing myself clearly. I watch it closely. I will re-balance my portfolio to something more sensible when my past gains are eroded to a predetermined set-point. I am OK with risking some of my past profits. That's it. If anyone can recommend a good way to invest in broad Canadian equity besides XIU-T I would be grateful.
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May 2, 2011 01:23
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necrobobsledder posted:What should my long term investment and retirement planning look like if I'm going to be ineligible to contribute to Roth IRAs due to (exceeding) income restrictions for an extended period of time? From what I've gathered all I can do is dump money into my company's 401k and get bilked out of money either through non-tax sheltered accounts or hoping some guy manages my money better than I would. Meanwhile, my Roth IRAs will just sit and do their thing until I start not making much money again or they raise the income restrictions or whatever. This wouldn't be a big deal and all if I was somewhat near retirement age, but I'm just 27 and only have about $80k in retirement accounts including my 401k and my wife has less than nothing so I feel very vulnerable (couldn't scrounge the money to open up an IRA for her after emergency upon emergency cleaned me out). I'm in a similar position (I don't have an IRA because I got smarter about investing after starting to make too much) and I wouldn't spend much time worrying about your retirement if you already have 80k. Save money for life's (costly) surprises, make sure you have a big cushion, get your company's 401k match, and then try to be frugal. For some reason spending 10k on something doesn't feel as big of a deal when you have 100k in the bank, but you'll want it back if your brother asks to borrow that much to go to college. Basically if your income is high watch out for your expenditures, which will matter much more than your investment vehicles.
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May 2, 2011 05:42
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If I am not very concerned with fluctuations and would like to try to increase the overall value of my portfolio, should I be sticking a larger percentage of my investment into one fund that is diversified or should I be investing in a few different funds that hopefully will provide me with some diversification. I currently have 20,000 in Vanguard's small cap growth index, 10,000 in the mid cap index and about 10,000 in international growth. Closer to the end of the summer, when I am looking at adding more money, should I continue on in a similar path with a fund that might diversify more? Or with such a small amount of money should I be going with fewer funds and a higher amount?
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May 2, 2011 12:37
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gtkor - Have you done any research on value vs growth? It may be counterintuitive, but in the past, value stocks have returned more than growth stocks. You want to consider dropping the growth lean. Given how highly you are waited in small cap, your portfolio may be pretty volatile. In addition, a little bond investment can go a long way to smoothing that volatility. Here is my asset allocation for instance: 10% - Vanguard International Value Index 20% - Vanguard Total International Index 20% - Vanguard Total Bond Index 30% - Vanguard Total Stock Market Index 20% - Vanguard Small Cap Value Index
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May 2, 2011 15:20
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gvibes posted:gtkor - Have you done any research on value vs growth? It may be counterintuitive, but in the past, value stocks have returned more than growth stocks. You want to consider dropping the growth lean. Thanks for the info. I have looked into value, but not any more specifically than just general research as far as finding a fund. If I were to start to shift a lean away from growth, should I do that all at once? I'll certainly take another look at bonds. I think I'm still suffering from the idea that since I'm only 24, bonds are something I can hold off on until later.
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May 2, 2011 16:04
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gtkor posted:Thanks for the info. I have looked into value, but not any more specifically than just general research as far as finding a fund. If I were to start to shift a lean away from growth, should I do that all at once? Bonds aren't for old people. It helps balance out your portfolio so when equities in general aren't doing well you can at least compensate with returns from your bonds allocation. cowofwar fucked around with this message at 16:12 on May 2, 2011 |
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May 2, 2011 16:10
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cowofwar posted:I would split your future contributions into value and bonds until you hit your distribution target. That way you save on fees. That makes a lot of sense. Thanks also for the help.
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May 2, 2011 16:15
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I've got about $25k in student loan debt (all Stafford/federal subsidized/whatever, so no interest is accumulating) left over from when I went through some hard times. I'm still a student (grad school), but now things are much better. I'm easily going to max out my Roth IRA contributions this year, so I want to start getting ready to punch a big hole in the student loan debt the day I graduate. I figure I'll be able to save about $8000 in cash by the time I graduate (3 years). I can't find a whole lot of advice on what to do in this situation, since the capacity to pay off student loan debt while still a student doesn't seem common. Can I do anything better than make weekly deposits into the highest yield savings account I can find?
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May 2, 2011 16:29
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Is there any significant difference between having a Vanguard target retirement 20XX fund Roth IRA vs having a Vanguard Roth IRA brokerage account, and in that account you are 100% invested in Vanguard target retirement 20XX ETFs?
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May 2, 2011 17:41
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